Petra Diamonds has lowered its rough-pricing forecast for the second time in two months, citing ongoing market weakness.
The company now expects rough diamonds from its Finsch mine in South Africa to sell for between $70 and $80 per carat, down from the $80 to $90 per carat projection made last month. At the start of the year, prices were estimated between $98 and $105 per carat, highlighting the steep decline.
The latest price cuts follow disappointing results at Petra’s December tender, where sales showed continued weakness. Like-for-like prices for the first half of the fiscal year dropped 10% year over year, driven by a higher proportion of smaller-size diamonds on offer.
For the six months ending December 31, Petra’s revenue plummeted 22% year on year to $146 million, with sales volume falling 22% to 1.3 million carats. The sharp decline is partly due to an unusually strong comparative period in 2023, when the miner sold an additional 456,000 carats of deferred inventory. Production also declined by 2% to 1.4 million carats.
As a result, Petra’s net debt rose to $225 million as of December 31, up from $201 million in June, exacerbated by weak market conditions and the timing of tender sales. The miner held three tenders in the first half of the fiscal year, with four scheduled for the second half.
Despite these setbacks, Petra remains optimistic about near-term demand. CEO Richard Duffy pointed to encouraging signs, including increased online jewelry demand in the U.S. and stronger festive season sales in India, particularly during Diwali. Combined with reduced supply from major producers and industry-wide marketing efforts, these factors could help rebalance inventories and stabilize prices.
Will Petra’s strategy pay off, or is the diamond market headed for deeper trouble?